The House of Lords opened a floodgate of claims against local authorities last week, after holding that pupils can sue if they have not been educated properly.

In a landmark ruling, the Law Lords decided that Pamela Phelps was entitled to sue the London Borough of Hillingdon for failing to diagnose her dyslexia.

There are another 200 similar cases waiting the outcome of this case.

But the brunt of claims will hit the pockets of local authorities rather than their insurers as many authorities choose to have a high level of excess, or self-insurance.

"The case raises the possibility of anyone who is disappointed with their education being able to sue for it," said John Morrell of law firm Vizard Oldham.

"The House of lords appear to have gone further than the courts in the US where they have largely ruled out claims for educational malpractice," said Andrew Cooper, partner at law firm Weightmans:

"Our message is do not panic. The vast majority of schools provide pupils with a first-rate education. We would urge extra diligence in keeping records up-to-date and making sure every decision about a pupil's education is sufficiently documented."

A spokesperson for Zurich Municipal, which insures around 60% of the local authorities in the UK, said the ruling will impact on the claims funds of the authorities.

Liz Taylor, chief executive of the Association of Local Authority Risk Managers said the decision underlined the importance of risk management. Underlying the decision is the risk of increased costs for authorities that may face a flurry of similar claims, some requiring lengthy legal determination.

To combat this risk, authorities may turn to the insurance market and incur the significant expense of additional cover.